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Last Updated : 2024-04-24 06:13:00
25 May 2012 06:30 pm - 0 - {{hitsCtrl.values.hits}}
It is a sad irony that when international oil prices are on a downward spiral, India has administered its biggest increase ever in the domestic price of petrol. Behind this irony lies a story of gross mismanagement of the oil economy by successive governments. The winds of reform that blew across other infrastructure industries such as telecom, transforming them unrecognisably, have largely been absent in the oil industry. The result is a mess characterised by ballooning subsidies, opaque pricing policies and a government that is guided more by political expediency than economic considerations in managing the industry. The reason why Wednesday’s price increase of Rs.6.28 per litre — net of taxes, translating into hikes as high as Rs.8.36 in some States — turned out to be so big is that the government, which faced State elections, did not allow oil companies to increase prices in the last six months when global oil markets were on the upswing. By the time the oil companies .jpg)
got the nod, their deficits had spiralled so high that shock therapy became inevitable. We might yet see a partial rollback but the question to ask is: would it not have been less painful if prices had been increased gradually over the past few months rather than in a one-shot massive hike? A regular increase in small doses might also not have elicited the kind of opposition the big raise has now engendered.
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